Liability & LegalQuestion 118 of 200

California Labor Code §2775 (codifying Dynamex Operations West, Inc. v. Superior Court (2018) and AB 5) classifies workers using the ABC test. For most security guard work, the practical effect is:

a.Guards are presumed independent contractors
b.Borello has no relevance in California
c.Guard classification is determined by federal law only
d.Guards are presumed employees unless the hiring PPO can satisfy all three ABC prongs (A: free from control; B: work outside the usual course of the hirer's business; C: customarily engaged in an independently established trade) — and security work is rarely 'outside the usual course' of a PPO's business, so most guards must be employees

Explanation

Labor Code §2775 codifies the Dynamex ABC test for most California workers. Prong B — the work must be performed outside the usual course of the hiring entity's business — is the typical sticking point for PPOs, whose business is providing guards. As a result, most guards working for licensed PPOs must be classified as W-2 employees, not independent contractors. Misclassification exposes PPOs to wage-and-hour, payroll tax, workers' comp, and PAGA claims. Borello's multi-factor test (S.G. Borello & Sons v. DIR (1989) 48 Cal.3d 341) still applies to certain occupations exempted from §2775, but security guards are not on that exempt list.

Law Reference: Cal. Labor Code §2775 (codifying Dynamex/AB 5); S.G. Borello & Sons v. DIR (1989) 48 Cal.3d 341

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